Difference between Tax evasion and tax avoidance

[imaGoodBoyNow]

I feel like we all need a lesson on what’s going on

 

Like President Donald Trump, rich Americans often deploy sophisticated tax avoidance strategies to maximize their wealth.

Not to be confused with tax evasion, which is illegal, tax avoidance is entirely legal, even if many view it as unfair.

A sweeping New York Times report published Sunday revealed numerous tax reduction strategies used by Trump. He's not alone. Affluent taxpayers often have more avenues than ordinary Americans to avoid paying Uncle Sam.

 

Wealthy Americans are the largest source of underreported income, according to IRS data analyzed by researchers. The top 1% of American taxpayers account for about 34% of misreported income, according to a study published in the National Tax Journal.

Many wealthy Americans deploy complex, arcane but wholly legal strategies to minimize their tax obligations. Some use fairly straightforward strategies that allow them to minimize their taxes under the tax code.

 

Growing wealth through investments

It's much harder to avoid taxes on your paycheck than on your investments.

In general, the federal government taxes regular wages at higher rates than investment income. The long-term capital gains tax rate maxes out at 20%, and the highest income tax rate is 37%.

In other words, if you make a salary of $1 million, the government keeps $370,000. If you make $1 million on stocks or similar investments, the government keeps $200,000.

Selling assets at strategic times

Taxes on assets such as stocks and real estate investments aren't owed until they are sold. That helps people such as Jeff Bezos, the Amazon CEO, founder and richest person in the world, grow their wealth rapidly while avoiding a huge tax bill. Then they can be strategic about when they sell.

By stockpiling assets without selling, rich investors can minimize their tax burden.

"Wealthy individuals can wait to sell until it makes the most sense for them, such as a year in which they will have large capital losses to offset the gain," according to the Center on Budget and Policy Priorities.

Unrealized capital gains accounted for more than one-third of the assets held by the richest 1% of Americans in 2013, according to a Federal Reserve analysis. By comparison, the bottom 90% of Americans have only 6% of their assets in unrealized capital gains.

Using business income loopholes to reduce personal tax liability

The 2017 tax bill passed signed into law by Trump allowed for a 20% deduction on certain business income that passes through partnerships, sole proprietorships and S-corporations.

This is income that individuals report on their personal IRS returns, but the tax break allows them to reduce the tax rate on that money by up to 7.4 points, according to the CBPP.

This setup is most likely to help the wealthy: 61% of the benefits go to the wealthiest 1% of Americans, according to the Joint Committee on Taxation.

Lisa De Simone, associate professor of accounting at the McCombs School of Business at the University of Texas-Austin, said many tax breaks available for business owners were put in place to stimulate risk-taking and innovation.

“There’s a notion that there are lots of tips and tricks that only the wealthy can take advantage of,” De Simone said. “The provisions weren’t written to try to help the wealthy get away with things.”

Instead, she said, new businesses can benefit when they’re able to deduct early losses from income.

“You don’t have to be super-rich in order to claim a business loss," she said.

 

Taking advantage of death tax policies to enrich their heirs

The tax code allows Americans to build wealth through deferred capital gains, then pass those assets tax-free along to their heirs upon death.

Called the "stepped-up basis" tax break, this loophole "encourages wealthy people to turn as much of their income into capital gains as possible and hold on to assets until death, when a lifetime of gain becomes permanently exempt from tax," according to the CBPP.

The inheritor could be subject to paying the estate tax if the total value of the estate exceeds a certain threshold, but that threshold has been substantially increased.

The 2017 tax law doubled the amount of a deceased person's wealth that's shielded from the estate tax from about $5.5 million to more than $11 million. The limit is poised to reset to its original amount in 2025 unless Congress takes action.

[Blueliner]

Thanks for posting. But they know this and simply don’t care. It’s not even about his taxes. This is yet just another in their long line of unethical means to their (unsuccessful) end game. Parscale is now “arrested”. This shot will never end end with dems until they start going to jail for this shit. 

[BUFORDGAWOLVES]

So, basically I’m gonna clean out the cushions, the truck for change get pushed into the 1% bracket ... hire tax attorneys and get even richer. 

Better yet get elected then decline showing said tax returns for 3 1/2 years cause its legal.

Gotcha. 
 

bgw

[Belly Bob]

45 minutes ago, Blueliner said:

Thanks for posting. But they know this and simply don’t care. It’s not even about his taxes. This is yet just another in their long line of unethical means to their (unsuccessful) end game. Parscale is now “arrested”. This shot will never end end with dems until they start going to jail for this shit. 

Are you in the "if it's not illegal, then it's not to be criticized" camp?

Notice, I'm not trying to have an implicit conversation about Trump or Democrats or Republicans or anything else. 

[Belly Bob]

1 hour ago, imaGoodBoyNow said:

I feel like we all need a lesson on what’s going on

Thanks for the lesson.

What's your view on the fact (assuming it's a fact) that the top 1% percent of American taxpayers account for 34% of misreported income?

I've often heard on this site that Trump is trying to revive the middle class. That sounds nice. 

[imaGoodBoyNow]

7 minutes ago, Belly Bob said:

Are you in the "if it's not illegal, then it's not to be criticized" camp?

Notice, I'm not trying to have an implicit conversation about Trump or Democrats or Republicans or anything else. 

Listen trumps draining swamp, y’all acting like it’s his fault the tax system is shot, it’s been a trainwreck

 

 if he’s smart enough to only pay $750 on taxes than good for him, I’m not hating on him because he has an awesome tax guy

[Troll]

3 minutes ago, Belly Bob said:

Are you in the "if it's not illegal, then it's not to be criticized camp?"

Notice, I'm not trying to have an implicit conversation about Trump or Democrats or Republicans or anything else. 

Go ahead and criticize then...

tell everyone what's wrong with it ...👍

 

For extra credit you could try to explain how people should NOT view this, as in their best interest to vote for someone who can effectively limit liabilities...

you know ....like on a world stage where the "cheap guy" who knows how to work a (now global) system is your representative....

PS: So how much "world tax" should we pay...United nations, Who, EU, foreign nation 'charity contributions' etc....and do you think we pay more or less than our 'share' there ? 🤔

[Belly Bob]

1 minute ago, imaGoodBoyNow said:

Listen trumps draining swamp, y’all acting like it’s his fault the tax system is shot, it’s been a trainwreck

 

 if he’s smart enough to only pay $750 on taxes than good for him, I’m not hating on him because he has an awesome tax guy

No, I get it. 

It's not the President's problem. 

[Troll]

3 minutes ago, Belly Bob said:

Thanks for the lesson.

What's your view on the fact (assuming it's a fact) that the top 1% percent of American taxpayers account for 34% of misreported income?

I've often hear on this site that Trump is trying to revive the middle class. That sounds nice. 

That's why I sugested the "flat tax"...

eliminates rich writeoffs and poor leaching...

if you think about it 🤔

[Belly Bob]

1 minute ago, Troll said:

Go ahead and criticize then...

tell everyone what's wrong with it ...👍

 

I think it's silly to say that if x is legal, then it can't be criticized.

Slavery was once legal, for example.

I think I may have heard you criticize legal diversity and inclusion practices in the past.

[Troll]

1 minute ago, Belly Bob said:

No, I get it. 

It's not the President's problem. 

Except you forget he was not the president...

but merely a citizen... for these returns...

in fact, he could never be considered the way you 'falsely' represent here....

as he was never part of government then or prior.

Crossing up your time frames to spew spit ...shameful...

 

You drinking this morning ? A little early...don'cha think ? 🤣

[Troll]

5 minutes ago, Belly Bob said:

I think it's silly to say that if x is legal, then it can't be criticized.

Slavery was once legal, for example.

I think I may have heard you criticize legal diversity and inclusion practices in the past.

Yes  we agree 👍.... but no one is arguing your right to try 👌

 

So what is the criticism ..

.you know other than your "right" to criticize...

Still haven't come up with one yet...

go figure...

[DarterBlue]

1 hour ago, imaGoodBoyNow said:

I feel like we all need a lesson on what’s going on

 

Like President Donald Trump, rich Americans often deploy sophisticated tax avoidance strategies to maximize their wealth.

Not to be confused with tax evasion, which is illegal, tax avoidance is entirely legal, even if many view it as unfair.

A sweeping New York Times report published Sunday revealed numerous tax reduction strategies used by Trump. He's not alone. Affluent taxpayers often have more avenues than ordinary Americans to avoid paying Uncle Sam.

 

Wealthy Americans are the largest source of underreported income, according to IRS data analyzed by researchers. The top 1% of American taxpayers account for about 34% of misreported income, according to a study published in the National Tax Journal.

Many wealthy Americans deploy complex, arcane but wholly legal strategies to minimize their tax obligations. Some use fairly straightforward strategies that allow them to minimize their taxes under the tax code.

 

Growing wealth through investments

It's much harder to avoid taxes on your paycheck than on your investments.

In general, the federal government taxes regular wages at higher rates than investment income. The long-term capital gains tax rate maxes out at 20%, and the highest income tax rate is 37%.

In other words, if you make a salary of $1 million, the government keeps $370,000. If you make $1 million on stocks or similar investments, the government keeps $200,000.

Selling assets at strategic times

Taxes on assets such as stocks and real estate investments aren't owed until they are sold. That helps people such as Jeff Bezos, the Amazon CEO, founder and richest person in the world, grow their wealth rapidly while avoiding a huge tax bill. Then they can be strategic about when they sell.

By stockpiling assets without selling, rich investors can minimize their tax burden.

"Wealthy individuals can wait to sell until it makes the most sense for them, such as a year in which they will have large capital losses to offset the gain," according to the Center on Budget and Policy Priorities.

Unrealized capital gains accounted for more than one-third of the assets held by the richest 1% of Americans in 2013, according to a Federal Reserve analysis. By comparison, the bottom 90% of Americans have only 6% of their assets in unrealized capital gains.

Using business income loopholes to reduce personal tax liability

The 2017 tax bill passed signed into law by Trump allowed for a 20% deduction on certain business income that passes through partnerships, sole proprietorships and S-corporations.

This is income that individuals report on their personal IRS returns, but the tax break allows them to reduce the tax rate on that money by up to 7.4 points, according to the CBPP.

This setup is most likely to help the wealthy: 61% of the benefits go to the wealthiest 1% of Americans, according to the Joint Committee on Taxation.

Lisa De Simone, associate professor of accounting at the McCombs School of Business at the University of Texas-Austin, said many tax breaks available for business owners were put in place to stimulate risk-taking and innovation.

“There’s a notion that there are lots of tips and tricks that only the wealthy can take advantage of,” De Simone said. “The provisions weren’t written to try to help the wealthy get away with things.”

Instead, she said, new businesses can benefit when they’re able to deduct early losses from income.

“You don’t have to be super-rich in order to claim a business loss," she said.

 

Taking advantage of death tax policies to enrich their heirs

The tax code allows Americans to build wealth through deferred capital gains, then pass those assets tax-free along to their heirs upon death.

Called the "stepped-up basis" tax break, this loophole "encourages wealthy people to turn as much of their income into capital gains as possible and hold on to assets until death, when a lifetime of gain becomes permanently exempt from tax," according to the CBPP.

The inheritor could be subject to paying the estate tax if the total value of the estate exceeds a certain threshold, but that threshold has been substantially increased.

The 2017 tax law doubled the amount of a deceased person's wealth that's shielded from the estate tax from about $5.5 million to more than $11 million. The limit is poised to reset to its original amount in 2025 unless Congress takes action.

Basically the rich write the tax code through the efforts of their lobbyists. Therefore, they stack it with deductions you and I can never dream of taking. However, the other is criminal (fraud), and I suspect your boy DJT has engaged in both. 

Bottom line is: America can decide whether it wants to be Mexico, Brazil or worse (maybe Somalia), or if it wants to remain a world power. To remain a world power, taxes need to be paid to support the essential services provided by government. For those of you that think government services are unnecessary, I suggest you take your next vacation in Haiti and rethink your position. 

Just saying ... 

[Troll]

1 minute ago, DarterBlue said:

 To remain a world power, taxes need to be paid to support the essential services provided by government. For those of you that think government services are unnecessary, I suggest you take your next vacation in Haiti and rethink your position. 

Just saying ... 

Yeah exactly....👍

Those "defund the police" people are just plain lunatics aren't they....👀

Knew you would see it all ...eventually...🤣

[HSFBfan]

6 minutes ago, DarterBlue said:

Basically the rich write the tax code through the efforts of their lobbyists. Therefore, they stack it with deductions you and I can never dream of taking. However, the other is criminal (fraud), and I suspect your boy DJT has engaged in both. 

Bottom line is: America can decide whether it wants to be Mexico, Brazil or worse (maybe Somalia), or if it wants to remain a world power. To remain a world power, taxes need to be paid to support the essential services provided by government. For those of you that think government services are unnecessary, I suggest you take your next vacation in Haiti and rethink your position. 

Just saying ... 

Well cops are government services and we have a percentage of people who want them gone 

[HSFBfan]

The rich have write offs that we do not.

They have business expenses travel etc etc that are all written off. You put your vehicles in your business name and it's a write off 

You make your house an office and you write off your house 

All this is once again is the media and the democrats hate trump 

And for whatever reason there is people in this country hate the rich 

I personally love the rich. 

 

[noonereal]

Just now, HSFBfan said:

Well cops are government services and we have a percentage of people who want them gone 

off subject but did you just get an emergency message on your phone? COVID is spiking in Orange, Rockland and Brooklyn! 

 

Guess why? A certain orthodoxic religion is blowing off the mask and social distancing mandates as they congregate in masses to celebrate their holidays last week and this week.

I think this is one thing we can agree on, they need to be quarantined so teh rest of us in these areas are not their victims of disease. 

[noonereal]

3 minutes ago, HSFBfan said:

The rich have write offs that we do not.

They have business expenses travel etc etc that are all written off. You put your vehicles in your business name and it's a write off 

You make your house an office and you write off your house 

 

It's not that simple. 

There are very strict rules on car and home offices. and this applies to anyone that works for themselves. I never paid $750 for a year of withholding. 

[Troll]

3 minutes ago, noonereal said:

It's not that simple. 

There are very strict rules on car and home offices. and this applies to anyone that works for themselves. I never paid $750 for a year of withholding. 

you never invested hundreds of millions into building in a city...

only to be run out of town with losses you must carry forward ...

either.

Hope this helps 👍

 

PS: trying to equate home office write offs is also silly  (both sides)...

 

[noonereal]

5 minutes ago, Troll said:

you never invested hundreds of millions into building in a city...

only to be run out of town with losses you must carry forward ...

either.

Hope this helps 👍

 

PS: trying to equate home office write offs is also silly  (both sides)...

 

follow teh thread, that is what the kid did, not me

 

I responded to the kid to try to teach him.

but thanks for the needless aggressive post! 

[Troll]

3 minutes ago, noonereal said:

follow teh thread, that is what the kid did, not me

 

I responded to the kid to try to teach him.

but thanks for the needless aggressive post! 

Was on 'your side' there ...🤣

Note the "(both sides)" notation 👀

you are welcome...👍

[HSFBfan]

You pay taxes on ur gains 

If u lose more than you gain your not gonna pay taxes plus all the write off that you get 

If u play scratch off keep all of them they are write offs 

If u go to the horse track keep all your stubs they are write offs 

Etc

[imaGoodBoyNow]

1 minute ago, HSFBfan said:

You pay taxes on ur gains 

If u lose more than you gain your not gonna pay taxes plus all the write off that you get 

If u play scratch off keep all of them they are write offs 

If u go to the horse track keep all your stubs they are write offs 

Etc

People are acting like Trump created tax write offs, can’t hate him for taking advantage of taxes

 

now any smart people in here wanna explain what exactly fraud did trump commit? Trust me I need a reason to hate trump but I yet to see any evidence that he just committed fraud

 

 

[HSFBfan]

1 minute ago, imaGoodBoyNow said:

People are acting like Trump created tax write offs, can’t hate him for taking advantage of taxes

 

now any smart people in here wanna explain what exactly fraud did trump commit? Trust me I need a reason to hate trump but I yet to see any evidence that he just committed fraud

 

 

He didn't. 

He used the tax laws and his accountants for his benefit. Good for him. The laws worked out for him. If your too dumb to get the right people to make sure you don't give your money to the government than im sorry

He has many businesses that lost money. It benefits him

We have companies like Amazon general electric and such that made over 100 million in a year and didn't pay a dime to federal taxes due to the tax laws 

[Mag44]

41 minutes ago, DarterBlue said:

Basically the rich write the tax code through the efforts of their lobbyists. Therefore, they stack it with deductions you and I can never dream of taking. However, the other is criminal (fraud), and I suspect your boy DJT has engaged in both. 

Bottom line is: America can decide whether it wants to be Mexico, Brazil or worse (maybe Somalia), or if it wants to remain a world power. To remain a world power, taxes need to be paid to support the essential services provided by government. For those of you that think government services are unnecessary, I suggest you take your next vacation in Haiti and rethink your position. 

Just saying ... 

Where have you lived or traveled to other than America and for how long...Tell us other nations that you like and why ...Tell us the history of Argentina and most of all what is your income leve. ie Low, Medium, high,very high..Oh, do you get money back at the end of the year?? I only ask to give context your angry and dissatisfied posts....You should just leave and live in Cuba or France....Go guy, go...